FATF proposes granting more control rights to stablecoin issuers

The Financial Action Task Force (FATF) recommends that countries require stablecoin issuers to integrate smart contract functions that allow freezing, burning, or adding assets to a blacklist to prevent money laundering and illegal financing.

In a recent report, FATF warns that peer-to-peer transactions through "unhosted" wallets are a significant loophole in anti-money laundering controls because they do not go through regulated intermediaries. The agency states that cybercriminal groups like Lazarus Group have used stablecoins, especially USDT on Tron, to launder money from cyberattacks. Iranian actors are also accused of exploiting stablecoins to evade sanctions.

FATF suggests adding customer verification when exchanging stablecoins, setting transaction limits, and establishing a 24/7 coordination mechanism with law enforcement agencies.

Meanwhile, the European Central Bank warns that stablecoins could reduce bank deposits and impact monetary policy effectiveness, especially if USD-pegged stablecoins are widely used.

However, the supply of USD-pegged stablecoins has reached approximately $294.5 billion, with Tether dominating the market at nearly $184 billion USDT.